Judge’s ruling: Mills defrauded his business partner

Buz Mills has made it clear he’s ready to spend a boatload of cash on his campaign to become Arizona’s next governor, but eight years ago a judge in Florida ruled that Mills cheated a business partner out of millions of dollars by withholding information about the sale of a company both of them owned.

According to court documents, Mills bilked John Mortellite out of several million dollars by arranging the sale of OPM-USA, Inc. without telling Mortellite, then buying out Mortellite’s 10-percent share of the company for much less than it was worth. Mills and his wife, Sonja, owned 90 percent of the communications company.

It all started in 1997 when Mills began talks with American Tower L.P. to sell OPM-USA, which he ultimately sold for $105 million. But he bought out Mortellite for just $1.5 million, according to court documents, without telling him about American Tower’s offer or disclosing OPM’s full value. Mills even told Mortellite to extend a vacation for several weeks to keep him from finding out about the negotiations with American Tower.

When Mortellite returned from vacation, Mills fired him. Later, at an Aug. 1997 board meeting, Mortellite agreed to leave the company and take the buyout based on an incorrect assumption about the company’s value, according to court documents. Mills didn’t tell Mortellite about American Tower’s offer, even when Mortellite’s attorney asked at the board meeting whether OPM was involved in any pending transactions.

“Mills, as the majority shareholder of OPM, did owe a fiduciary duty to Mortellite, the minority shareholder, which required Mills to act in good faith. Mills breached this duty and acted in bad faith toward Mortellite when he received the offer from American Tower and intentionally did not disclose the offer to Mortellite,” the trial court judge ruled. “Mills deceived Mortellite into thinking that there were no pending negotiations to purchase OPM stock and with the further intention that Mortellite would act to his detriment.”

According to the documents, Mills told an American Tower executive that he had a 10 percent shareholder to buy out but said it would not be a problem “Don’t worry. He has no idea what this is worth,” Mills told the executive, according to court documents.

Camilla Strongin, Mills’ campaign manager, said Mills did not make the comment about Mortellite that was attributed to him in a deposition. She said the case was vacated after Mills and Mortellite reached a settlement, which included a confidentiality agreement.

“They clearly had a difference of opinion, which is not unusual between a majority and a minority stockholder on the value of the stock. And they sat down and resolved the differences via a settlement, and the case was vacated,” Strongin said.

A state appellate court ruled that Mills did not follow the terms of his 1995 purchase agreement with Mortellite and that Mills owed his old partner more than the $1.5 million he paid for the shares. The appeals judge remanded the case back to the trial court.

“We conclude Mr. Mortellite will ultimately be entitled to a punitive damage award,” appellate Judge Virginia Hernandez Covington wrote in a 2002 ruling.

Mortellite was a neighbor of the Mills’ in 1995 when the three of them formed OPM, which was created to build cellular towers and sell them to communications companies. Mortellite bought a 10 percent share of the company for $100,000.

Mills initially opened talks with American Tower in an attempt to secure financing for OPM, but the talks devolved into an outright offer to buy the company. Mortellite was not involved in previous financing discussions with other companies and was on vacation when Mills began his talks with American Tower.

After selling OPM, Mills moved to Arizona in 1999 and bought Gunsite, a tactical firearms training school in Paulden. Mills said it was a longtime dream to move to Arizona, and the sale of OPM – which got him out of the telecommunications business for good – gave him the opportunity to do so. He became a candidate for governor earlier this year, and so far has put $2 million of his own money into the campaign.

“I just figured I can do this and live here on the ranch and finally get to Arizona, where I always wanted to get it. Everything just lined up right,” Mills said.

15 comments

I don’t trust Mills to serve in the best interests of the people of Arizona. He has failed the trust placed in him by a neighbor and business partner. Mills will certainly fail the trust of 5 million strangers.

If Mills wasn’t a crook there would have been no reason for him to “settle” anything.

Ol’ Buz stirred up the imagination of a lot of Tea Partiers. I feel bad for ALL who placed any faith in Buz Mills.

I am glad they dug up this skeleton from the past on Buz Mills, things like this need to be exposed to the voters, I am sorry to learn of this deliberate defrauding of his former business partner. I am however pleased to note that this should not hurt his chances of winning the Governors office which are still around 10% and with this all out in the open probably now closer to 5%.

I am very disappointed with the facts that have come out about Buz Mills. He seemed to ba a good candiate for governor. No Tea Party member is going to support Buz. It would be a good idea for him to just get our of the race for governor. Thanks, everyone who checked Buz’s background and let us know.

Folks – let’s stop acting like we were born yesterday! Business does not operate in a vacuum! There are personalities and egos involved. It is messy. Sometimes disagreements end up in court. What remains are legal documents, which only tell part of the story.

What I’ve noticed is that not all parties to an agreement shoulder the same burden. Often the guy with the most to lose is usually the guy that digs in and makes things happen. In this case, Buz put in 10x as much as Mr. Mortellite. He was probably pretty serious about the opportunity. Further evidence of this is that Mr. Mortellite was willing to take extended vacations. If you have any experience with a small business, you know that being away from it is just not a luxury you can afford. My guess is Buz was disgusted by his Mr. Mortellite’s work ethic/contribution and wasn’t about to let him grab glory on an equal footing for doing nothing.

Mr. Mortellite probably didn’t deserve more than his original $100K investment. I think Buz was a prince for allowing him to realize an incredible 1,400% ROI over 21 months. My guess is Mr. Mortellite earned more than he imagined with very little personal contribution.

This is classic: the guy who works hard to make stuff happen gets branded the bad guy. Probably why they say it is lonely at the top.

Now let’s apply what we’ve learned about Buz:

Do you think the school administrators who number one for every teacher are doing a service to our children? If so, please explain to me the value that they bring to the system. Do you think they would take extended vacations if offered?

If this means Buz will eliminate school administrators that truly bilk our education system at the expense of children and teachers, then I’ll be first in line to vote for him. I’m sure they’re going to be mad as hell when Buz tells a bunch of them their services are no longer needed. They’ll scream foul, we were robbed of our pensions, etc. The fact is keeping them on the payroll takes resources away from the people the system is intended to serve. Which of you, not including school administrators, are going to support maintaining status quo at the expense of education for our kids?

I suggest you recalibrate and recognize that hard decisions are coming down the path. Buz is the kind of leader that can get the job done – without having to be the most popular. I have every confidence that he will focus on our financial situation and do what needs to be done to make Arizona the jewel in the crown of the United States.

I was thinking he would be good for a bit. But I think in every way John Munger is even better. I have meet him in person and I plan to vote for him. If you liked Buz Mills but are now disappointed then look for John Munger you will like him also..

I can hardly believe what I’m reading with the “defense” of Mills’ conduct. This isn’t a case of “he said, she said” about a “business dispute.” Mortellite filed a lawsuit and won it – he PROVED his claims against Mills in court, and apparently won TWICE (at trial and again on appeal). The story plainly says “Mortellite filed suit in Florida’s 12th Judicial Circuit, where a trial court judge ruled that Mills fraudulently induced Mortellite to sign away his shares of OPM.” That isn’t just a “disagreement” or “difference of opinion” about what something is worth – what the trial judge is describing is LYING to a person to whom Mills owed a legal duty to disclose the truth about a simple FACT. And the court of appeals went even further to say that Mortellite was probably entitled to punitive damages, which under Florida law would mean that Mills’ conduct had to be proved by “clear and convincing evidence” and that he was personally guilty of intentional misconduct. (“We conclude Mr. Mortellite will ultimately be entitled to a punitive damage award,” appellate Judge Virginia Hernandez Covington wrote in a 2002 ruling.) He “settled” (paid off) a claim for fraud only after losing TWICE in court – that isn’t the conduct of a businessman settling an ordinary business dispute. I can’t believe that anybody would defend the type of conduct described in that article.